Malibu Boats’ accelerated product development cycle and innovations in a high-growth segment keep the brand poised for continued market share gains, according to a report by Wells Fargo analysts.
The newly traded company reported quarterly results that were slightly above expectations, with revenue and gross margins driven by new product strength, analysts wrote in a report.
Overall performance sportboat sales were up 15 percent in December and 25 percent in January, with Malibu’s sales up 25 percent and 58 percent, respectively.
“We believe the company will continue to tightly control channel inventories and err to leaving the market short, especially at the end of the June model/fiscal year,” analysts wrote.
February through September is the peak retail selling period for the performance sport boat segment; therefore, “caution should be taken when looking at retail sales during the October-January period, in our view,” analysts wrote.
But the company should outperform expectations, considering current U.S. boat market dynamics support a broad market recovery, crossover interest from adjacent boat segments, sustained innovation yielding higher volume gains and largely untapped international markets, analysts wrote.
Malibu’s stock valuation range was raised $4, from the $20 to $22 range to $24 to $26.
The outperform rating by Wells Fargo was also based on:
• Malibu’s leading position in the high-growth performance sportboat (ski/wakeboard) segment should allow for above-average revenue/earnings expansion
• Product innovation sets Malibu apart from competition and creates barriers to entry
• U.S. boat industry dynamics support a sustained broad market recovery
• Geographic and product white spaces provide expansion opportunities
• Efficient manufacturing and vertical integration yield strong margins for Malibu